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Russia Stocks Rebound as Gazprom Rises on South Stream News

Russian stocks rose for the first day in four as OAO Gazprom, the country’s biggest company, rallied after Vladimir Putin said the South Stream pipeline may start natural-gas flows to the European Union as early as 2014.

The Micex Index gained 0.6 percent to 1,305.86 by the close in Moscow. The benchmark gauge retreated 11 percent last month, the most since September. Gazprom, Russia’s natural gas export monopoly, added 2.1 percent. Preferred shares of OAO Sberbank, the country’s biggest bank, slid after Interfax reported Chairman German Gref signaled the securities will not be converted into ordinary shares in the near future.

The Micex erased a drop of as much as 1.4 percent earlier. Gazprom’s planned South Stream will probably take one and a half to two years to start working, Putin said today in St. Petersburg at a summit with European Union officials. The company’s shares, which have the second-biggest weighting in the Micex, climbed to 151.53 rubles.

“The market has declined so much, it has nowhere further to fall,” Leonid Slipchenko, a strategist at UralSib Capital in Moscow, said by phone. “It has to rebound.”

Crude oil, Russia’s main export earner, slumped as much as 2.4 percent in New York before erasing losses. Russia received almost 50 percent of budget revenue from oil and gas sales last year. Most metals retreated on the London Metal Exchange and the Standard & Poor’s GSCI Index declined as much as 1.6 percent.

TNK-BP, Norilsk

China’s Purchasing Managers’ Index dropped to the lowest level in a year, the statistics bureau said yesterday. The U.S. jobless rate rose to 8.2 percent from 8.1 percent, according to June 1 data. Orders to U.S. factories unexpectedly fell, data showed today.

OAO Norilsk Nickel, Polyus Gold International Ltd. and United Co. Rusal climbed after Morgan Stanley said the companies will benefit from the ruble’s decline. The ruble snapped an eight-day streak of declines today, closing up 0.7 percent at 33.4510 against the dollar.

TNK-BP rose as much as 3.4 percent after VTB Capital and Renaissance Capital said BP Plc’s statement last week that it’s considering selling its 50 percent stake in the oil company probably won’t end in a deal. The stock climbed 1.1 percent to 70.76 rubles by the close, the biggest gain since May 24.

Spanish Prime Minister Mariano Rajoy said European leaders should reinforce efforts to protect euro-area banks, ratcheting up pressure on German Chancellor Angela Merkel to back new ideas for a resolution of the debt crisis. French Finance Minister Pierre Moscovici will travel to Brussels today to meet with EU Economic and Monetary Affairs Commissioner Olli Rehn and EU Financial Services Commissioner Michel Barnier.

“The market is awaiting support from the European Central Bank,” Slipchenko said.

Fund Outflows

Russia-dedicated equity funds posted redemptions for the seventh week in eight, registering a net outflow of $8.2 million in the week ended May 30, according to EPFR Global. Developing-nation equity funds registered outflows of more than $1 billion for the fourth consecutive week, the longest streak since the third quarter of 2011.

The MSCI Emerging Markets Index fell 1.2 percent to 883.31 today, the lowest level since Nov. 25, while the MSCI BRIC Index of shares traded in India, Brazil, Russia and China, dropped 0.9 percent.

Russian stocks trade at 4.8 times estimated earnings, having lost 6.9 percent this year. That compares with a 3.6 percent drop for the MSCI Emerging-Market Index which trades at 9.1 times projected earnings.

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